Glyphosate producers say high demand and low supply worldwide are driving up the price of herbicides, but some farmers say they’ve heard it all before.
The price of Roundup herbicides increased approximately seven percent across all product tiers in Canada Feb. 12. Last fall, mid and low tier Roundup products cost, on average, 12 percent more than they did in 2006.
“We’ve raised prices, probably twice, this is our third time, and it’s largely due to a couple of factors,” said Monsanto spokesperson Trish Jordan.
Booming commodity prices have created a high demand for the product, leading to a supply shortage, Jordan said.
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“It’s kind of economics 101 almost. There’s huge demand for this product and limited supply.”
A number of China’s glyphosate plants were shut down because of environmental regulations and an inability to deliver consistent supply.
The dynamic Chinese economy is also a factor. A value-added tax that subsidized a number of export products, including glyphosate, has been reduced to five percent from 11 percent. At the same time, the Chinese yuan has appreciated against other world currencies, including the U.S. dollar and the euro, making it more expensive for buyers to import from China.
In an effort to meet demands, Monsanto is running its factories at overcapacity. The company is also considering the construction of new plants and trying to eliminate any bottlenecks in existing ones.
According to Monsanto, the suggested retail price of Roundup Weathermax, Transorb HC, and R/T 540 increased to $12.84. $11.22 and $8.70 per litre from $12.00, $10.49 and $8.40, respectively.
NuFarm’s Credit herbicide has seen a similar cost increase in Canada within recent weeks. Although NuFarm doesn’t give a suggested retail price for Credit, and said it can’t divulge the price it gives dealers, the company did say rates had risen about seven percent.
Both companies noted that most glyphosate herbicides recently increased in price.
“Our costs have gone up and we have increased our prices … we’ve had no choice,” said Brent Zacharias, commercial manager for NuFarm Canada.
Zacharias also points to China to explain why prices are increasing, although he emphasized the country’s resources more than factory shutdowns.
China, along with the United States, is one of the main suppliers of the raw materials needed to produce glyphosate herbicides.
“That’s linked to the necessary supplies of phosphate in those countries, so the technical manufacturers of glyphosate are really starting to increase their production capacity and that’s really resulting in significant demand and driven cost increases.”
In the long term, Zacharias expects global production capacity will increase and bring supply back in line with demand, although he doesn’t have an estimate of how long this will take.
But some farmers are skeptical.
Darrin Qualman, a researcher with the National Farmers Union, thinks that the price increase is part of a larger pattern in which companies like Monsanto match farmer’s fortunes.
“These companies always have something to talk about when they raise their prices,” he said. “When farmers have a little more, they take a little more and when farmers have a little less they take a little less.
“We were just in Ottawa last week talking to the (House of Commons) agriculture committee, and the thing that we found absolutely astounding and wanted to bring to their attention, was that between 1985 and now … farmers have produced two-thirds of a trillion dollars worth of product, and the input supplies have taken the entire two-thirds of a trillion.”
Qualman said the company’s claim that more demand means higher prices is somewhat hypocritical. Monsanto has worked to push Canadian agriculture towards its model of farming, which he said is premised on using chemicals, genetically modified seeds and direct seeding rather than tillage.
“For them to turn around and say ‘look guys, we’ve got to increase the price of Roundup because people are using more chemicals,’ well, we’re using more chemicals partly because we’re doing what Monsanto urged us to do.”
